The Center For Rule-making Strategies (CRS) have offered a proposal to Japan’s financial regulators on how to treat the new but quickly emerging industry of ICOs. The proposal was made by the ICO Business Research Group which is comprised of prominent business directors, House of Representative members, lawyers, accountants, and cryptocurrency exchange owners.
[Issuance principle 1] Issuers should define and disclose conditions for the provision of conveniences such as services and rules on the distribution of procured funds, profits, as well as residual assets, to investors of tokens, shareholders, and debt holders.
Note: The above is based on the idea that, although ICO can be designed by issuers at their discretion, potential influences (related to rights and obligations) on token investors, shareholders, and debt holders need to be clearly demonstrated prior to the issuance.
[Issuance principle 2] Issuers should define and disclose a means for tracking the progress of white papers.
The following guidelines and trading principles were also given in the report.
[Guideline 1] ICOs should be designed to be acceptable to existing shareholders and debt holders.
Note: ICO should not become a tool that brings advantage nor disadvantage to specific stakeholders.
[Guideline 2] ICOs should not become a loophole in existing financing methods as equity finance.
Note: To enable ICO to gain wide support in the society, a situation where it is abused as a tool for evasion of laws should be avoided
[Trading principle 1] Token sellers should confirm the identity (Know Your Customer: KYC) and suitability of customers.
[Trading principle 2] Administrative companies that support the issuance of tokens should confirm the KYCs of issuers.
[Trading principle 3] Cryptocurrency exchanges should define and adopt an industry-wide minimum standard on token listing.
[Trading principle 4] After tokens are listed, unfair trade practices of such tokens such as insider trading should be restricted.
[Trading principle 5] Parties related to the trading of tokens such as issuers, administrative companies, and token exchanges should make efforts to ensure cyber security.
Read the full proposal HERE